In-Depth: 457 Visa Changes

On 18 April 2017, the Australian Government announced changes to the skilled worker visa program, including the 457 visa and employer nominated permanent residence visas.

Some of the changes seem to implement recommendations of an independent review into the integrity of the temporary work (skilled) visa (Subclass 457) programme conducted in 2014. The integrity review panel looked at measures to reduce mis-use and and improve flexibility and responsiveness to economic and business changes. Other changes have come as suprise, in particular the sudden changes to the skill lists which restrict access to the 457 visa program for 216 removed occupations and 59 occupations which now have additional requirements to be met.

The Government is proposing to introduce a new visa class to implement reforms, called a Temporary Skills Shortage (TSS) Visa. The new TSS visa programme is proposed to be comprised of a Short-Term stream of up to two years and a Medium-Term stream of up to four years.  The new TSS visa will include a higher focus on English language proficiency, labour market testing and previous skilled work experience. A new training fund will also be established for employer sponsors to contribute to the training of Australian workers.

Below we summarise the proposed changes based on what we know so far, and what they mean for visa holders and employers.

We expect further changes to the program as legislation is drafted and debated, and following feedback from industry and key stakeholders.

Changes from 19 April 2017

Changes to skilled occupations lists:

  • New, condensed skilled occupation lists will take effect:
    • Short Term Skilled Occupation List (STSOL) replacing the old Consolidated Skilled Occupation List (CSOL)
    • Medium – Long Term Skills Shortage List (MLTSSL) replacing the Skilled Occupation List (SOL)
  • 216 occupations have been removed from STSOL – a list of removed occupations is outlined here.
  • Caveats added to 59 other occupations restricting access for applicants with less than 2 years’ work experience, or businesses which don’t meet location, size or turnover thresholds. Accountants, bakers, cooks and chefs, management roles, technical sales reps, customer service managers, supply chain and facilities managers, marketing specialists, recruitment consultants are impacted.
  • 457 nomination and visa applications for occupations which now are no longer on the skilled occupation list will not be approved. Applicants will have the opportunity to withdraw their applications and refunds provided.

Changes to the 457 visa validity periods:

  • Occupations on the STSOL will be granted a 457 visa for two years and occupations on the MLTSL will be granted a 457 visa for four years.

Changes from 1 July 2017

Further changes to skilled occupation lists

  • Further changes to the STSOL based on advice from the Department of Employment and industry consultation.
  • The MLTSSL will be revised based on outcomes from the Department of Education and Training’s 2017-18 SOL review.
  • Further changes to the existing 457 visa:
  • English language exemption for high income earners will be removed. Applicants whose salary is over $96,400 must now meet the English language requirement.
  • Police clearance certificates will become mandatory.
  • Policy settings about the employer sponsor training benchmark requirement will be updated.
  • Modest increases to Visa Application Changes.

Changes to the Employer Nomination Scheme 186 visa:

  • Higher English language criteria – IELTS Band 6
  • Age limit for 186 Direct Entry stream will be reduced from 50 to 45 years.

Changes due by 31 December 2017

  • Collection of Tax File Numbers (TFN) for all employer sponsored visa holders. Data will be matched with the Australian Tax Office’s records to ensure that visa holders are not paid less than their nominated salary.
  • Publication of sponsors sanctioned for failing to meet their sponsorship obligations.

Changes from March 2018 (proposed)

  • The 457 visa will be abolished and replaced with the TSS visa. The TSS visa will be comprised of a Short-Term stream of up to two years, and a Medium-Term stream of up to four years.
  • TSS Visa Common Criteria
    • Work experience: at least two years’ relevant work experience.
    • Labour market testing (LMT) mandatory, unless an international obligation applies.
    • Minimum salary: Employers must pay Australian market salary rate and meet the Temporary Skilled Migration Income Threshold requirements (currently $53,900).
    • Character: Mandatory police clearance certificates.
    • Non-discrimination of Australian Workers: A non-discriminatory workforce test will apply.
    • Training requirement: Employers will be required to pay a contribution to the Skilling Australians Fund. The contribution will be:
      • payable in full at the time the worker is nominated;
      • $1200 per year or part year for small businesses (with annual turnover of less than $10 million) and $1800 per year or part year for other businesses.
  • TSS Visa Short-Term stream criteria:
    • Renewal: Capacity for one onshore visa renewal only.
    • No permanent residency pathway
    • Occupations:
      • For non-regional Australia, the STSOL will apply.
      • For regional Australia, the STSOL will apply, with additional occupations available for regional employers.
    • English language requirements: IELTS (or equivalent test) score of 5, with a minimum of 4.5 in each test component.
    • Genuine temporary entrant requirement.
  • TSS Medium-Term stream criteria:
    • Renewal: Capacity for visa renewal onshore
    • Permanent residence pathway after three years.
    • Occupation lists:
      • For non-regional Australia – the MLTSSL will apply.
      • For regional Australia – the MLTSSL will apply, with additional occupations available to support regional employers.
    • English language requirements: IELTS 5 (or equivalent test) in each test component.

Analysis

The 457 visa reforms implement some recommendations from the Independent Review of Integrity in the Subclass 457 programme including addressing the use of the programme by migrants with qualifications but no work experience. The final report of the panel including its recommendations is available here: Robust New Foundations – A Streamlined, Transparent and Responsive System for the 457 Programme (1.4MB PDF).

However, some reforms announced contradict the recommendations of the independent panel. For example, the panel found that there is no evidence that mandatory labour market testing improves jobs for Australians. Indeed, the panel referred to OECD evidence which confirms that employer-conducted labour market testing is not “fully reliable”, and in the Australian context has proven ineffective to protect jobs for Australian workers.

At this stage, the evidence basis for removing the 216 occupations from the skilled occupations list has not been disclosed by the Government. A Ministerial Advisory Council on Skilled Migration (MACSM) was formed in December 2016 to review the list of occupations for 457 sponsorship but the outcome of that review or recommendations have not been published. This lack of transparency has taken the business community by surprise, and further consultation is needed to ensure that the changes do not adversely impact business competitiveness.

Removing the ability for many migrants to become permanent residents after spending a period of time in Australia and limiting work visas to only 2 years at a time could make it harder for employers to attract international talent.

What Does This Mean For Employers And Employees

Employers can continue to use the 457 visa program for new sponsorships, and employees can lodge applications for employer nominated permanent residence under both the Employer Nomination Scheme Direct Entry Stream and Temporary Residence Transition Stream until March 2018.

We expect that following this announcement, the Government will provide a draft bill to legislate the specific reforms to the employer sponsored work visa programme.

Grandfathering arrangements will need to be put in place for existing 457 visa holders. A key question for employers and visa holders is how existing 457 visa holders who qualify for permanent residence under the Temporary Residence Transition Stream will be grandfathered from March 2018.

We will continue to monitor the reforms and provide further updates in due course.

If you are unsure about the impact the changes could have on your migration plans, please get in touch info@themigrationagency.com.au or book an appointment to speak with our of our immigration specialists.

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